Three IoT Considerations Retailers Must Keep in Mind for 2018

The Internet of Things, powered by RFID technology, can help stores manage inventory more efficiently, set themselves apart from competitors, and provide great customer service while still maintaining streamlined operations.

Recognize How the IoT Can Set You Apart
Many organizations fail to fully grasp the IoT's potential. For example, retailers may not understand how the IoT will help set them apart from competitors, yet this is the most highly cited business challenge driving retailers to the technology. Similarly, many retailers are unaware that the IoT could allow them to reduce inventory, when inventory management is crucial to their bottom line.

With returns continuing to rise, and with retailer policies of allowing returns to any store increasing, the risk of items becoming lost in back rooms—real or metaphorical—also grows. Without the visibility created by the IoT, apparel retailers, in particular, cannot continue to manage growing return rates (now at more than 25 percent), especially if the solution involves buying more inventory to compensate for the inability to accurately track where those returns are located in their enterprise.

Business Challenges Drive IoT Interest
Although many successful retailers maintain a customer-centric approach, they also tend to adopt new technologies earlier, especially if those technologies help them to achieve new ways of operational excellence that puts them ahead of their competition. When it comes to the IoT, successful retailers relate those two challenges (providing great customer service and maintaining streamlined operations), but for many, it is unclear exactly how the IoT will help them accomplish both.

Others exhibit similar discontinuities, as the IoT can deliver greater speed and agility to operations, and may help close the gap between consumer and retailer technological capabilities. However, the connection between the IoT and growing a business faster is often missed. Oftentimes, companies tend to look for payback associated with a specific individual initiative—and with the IoT, that is very difficult because the infrastructure costs are high and need to be amortized across multiple initiatives.

When these points are combined, we can draw one conclusion: too much confusion remains around the valuable use cases for the Internet of Things and the actual business problems it can solve. Until retailers can eliminate that confusion, the technology will remain in labs or pilots, with very few full implementations.

Other opportunities will emerge later, but retailers have immediate problems that need solving, and the IoT will help. One solution would be to partner with a vendor that can help them minimize the initial infrastructure outlay costs, but also allow them to scale as initiatives take hold.